Here's what Suntec REIT should do to make Suntec Mall relevant again

Shoppers lost interest and flocked to other malls after its $410m three-year enhancement.

In the early 2000s, Suntec Mall was a popular location for Singapore shoppers, but after its renovation and the emergence of other retail options in suburban locations, shoppers had lost interest in the place.

Brokers DBS Equity Research and Maybank Kim Eng think Suntec REIT still has to work on the mall and it might just pay off.

On June 2015, Suntec REIT completed the $410m major three-year enhancement of the mall. This increased its leasable retail space from 855,000 sqft to 960,000 sqft.

DBS Equity Research said the new CEO, Chan Kong Leong, is the catalyst to transform Suntec Mall and close the rental gap between Suntec Mall and other suburban malls.

Under his tenure, foot traffic rose 12.2% YoY for the first nine months of 2017, whilst tenant sales improved 4.9%.

Still, passing rents at Suntec Mall stand at $10-11 psf per month versus other suburban malls of $15-18 psf per month.

"With management putting more emphasis on active asset management, we believe this business segment could surprise to the upside," said Maybank Kim Eng analyst Derrick Heng.

DBS Equity Research also identified the opportunities and whether it possible to turn around Suntec Mall.

The brokerage compared the mall to Vivocity and found the latter has more strategic store curation than Suntec's.

Meanwhile, DBS Equity Research said Suntec REIT must follow two principles for the mall to achieve optimal curation.

First, the layout design needs to be convenient to its shoppers, if not intuitive. Shoppers shouldn't take long to find a store.

Second, Suntec REIT must leverage on the impact of its anchor space, which usually commands lower rents with bigger space, to be a traffic puller to other nearby stores.

"Whilst we have identified 'flaws' at Suntec, we believe these are not insurmountable and the new CEO is aware of these issues," said DBS analyst Mervin Song. "Thus, we believe as Suntec changes the tenant mix as the leases expire over the next few years, not only should an improved tenant mix drive increased tenant sales and foot traffic (thus increasing the attractiveness of tenants to the mall), we believe rents, should also rise over time."